Bitcoin prices dropped below $63,000 on Monday morning as investors come to terms with the likelihood that the Federal Reserve won’t cut interest rates anytime soon and stagflation fears rise.
The top cryptocurrency was down 2% to $62,487, followed by Ether, which dropped 4.5% and hovered around $3,100. Dogecoin and Solana were also down, with more 5.5% and 4.5% drops, respectively, according to CoinMarketCap.
Neil Roarty, an analyst at investment platform Stocklytics, blamed fears of stagflation — a mix of low economic growth and high inflation — for the drop in Bitcoin’s price.
“With Bitcoin increasingly institutionalized, traders will be keeping a close eye on how both the Fed and the Treasury react,” he said in an email. “With riskier assets tending to fall harder during times of uncertainty, it could be bad news for Bitcoin if the clouds continue to gather.”
DTCC rules out collateral for Bitcoin-linked ETFs
The bearish trend in Bitcoin comes two days after an announcement by Depository Trust and Clearing Corporation (DTCC) — a financial services company that provides clearing and settlement services for the financial markets — that it will not provide any collateral for exchange-traded funds (ETFs) with exposure to Bitcoin or other cryptocurrencies. The DTCC also said it won’t offer any loans against these ETFs starting from April 30, 2024.
That means that financial institutions using DTCC’s clearing and settlement services won’t be able to use ETFs linked to cryptocurrencies as collateral. And that will impact how Bitcoin ETFs are treated in terms of financial stability and credit assessment when seeking credit or engaging in similar financing activities through DTCC’s system.
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